STRATEGIC MANAGEMENT
AND BUSINESS POLICY
THIRD EDITION
Chapter 1
Introduction to strategic
management and business
policy
AZHAR KAZMI
Learning objectives
Describe the historical development of strategic
management and business policy in the world and in
India
Discuss the likely future developments in the field of
strategic management and business policy
Explain the concept of strategy and its limitations
Describe the process of strategic decision making
Discuss the various schools of thought on strategy
formation
Describe the strategic management process
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Evolution of strategic management
and business policy
The genesis of strategic management
and business policy
Evolution based on management
practices
Historical perspective
Pointers to the future
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Hambrick and Fredrickson model of
strategic management
Internal and External
Strategic Analysis
Strategy:
Arenas
Vision and Goals and Vehicles Implementation Levers
Mission Objectives Differentiators and Strategic
Staging Leadership
Economic logic
D. C. Hambrick & J. W. Fredrickson: “Are you sure you have a strategy?” (2001). Academy of
Management Executive Vol. 15, No. 4, pp. 48-59
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The Indian scenario
Role of IIMs and ASCI
Role of AICTE
Role of AIMS
Role of AIMA
India-focused international studies
Strategic Management Forum of India
Publications
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Business policy defined
Business policy, as defined by Christensen and others, is
"the study of the function and responsibilities of senior
management, the crucial problems that affect success in
the total enterprise, and the decisions that determine
the direction of the organisation and shape its future.
The problems of policy in business, like those of policy in
public affairs, have to do with the choice of purposes, the
moulding of organisational identity and character, the
continuous definition of what needs to be done, and the
mobilisation of resources for the attainment of goals in
the face of competition or adverse circumstance”.
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The concept of strategy
A strategy could be:
plan or course of action or a set of decision rules making a
pattern or creating a common thread;
the pattern or common thread related to the organisation's
activities which are derived from the policies, objectives and
goals;
related to pursuing those activities which move an organisation
from its current position to a desired future state;
concerned with the resources necessary for implementing a
plan or following a course of action; and
connected to the strategic positioning of a firm, making trade-
offs between its different activities, and creating a fit among
these activities.
the planned or actual coordination of the firm's major goals and
actions, in time and space that continuously co-align the firm
with its environment.
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Levels at which strategy operates
LEVELS OF MANAGEMENT LEVELS OF STRATEGY
Corporate
CORPORATE Office CORPORATE-LEVEL
SBU SBU SBU
SBU A B C BUSINESS-LEVEL
FUNCTIONAL
Finance Marketing Operations HRM Information
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Strategic decision-making
Objectives to be achieved are
determined;
Alternative ways of achieving the
objectives are identified;
Each alternative is evaluated in terms
of its objective-achieving ability; and
The best alternative is chosen.
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Issues in strategic decision-making
Criteria for decision-making
Rationality in decision-making
Creativity in decision-making
Variability in decision-making
Person-related factors in decision-
making
Individual versus group decision-
making.
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Schools of thought on strategy
formation
The prescriptive schools
The descriptive schools
The integrative school
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Strategic management defined
Strategic management is defined as
the dynamic process of formulation,
implementation, evaluation and
control of strategies to realise the
organization’s strategic intent.
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Four phases in strategic
management
Establishment of
strategic Formulation of Implementation of Strategic
intent strategies strategies evaluation
Strategic control
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Comprehensive model of strategic
management
Strategic Intent Strategy Formulation Strategy Strategic
Implementation Evaluation
Vision Environmental Organisational
Mission Appraisal Appraisal Project
Business definition SWOT Analysis Procedural
Business model Corporate-level Strategies Resource allocation
Objectives Business-level Strategies Structural
Strategic analysis and choice Behavioural
Strategic plan Functional &
Operational
Strategic control
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